Gauging FX Risks For Cross-Border Payments

FinTechs are gaining traction in cross-border payments, and solutions are proliferating in the space to help firms manage foreign exchange (FX) risk as they also seek speed and security across payments.

Deutsche Bank’s Global Transaction Banking Unit released a report that shows that faster payments are spurring corporate treasurers to get a bit faster, too, as they manage risk.

The Deutsche report cites data from Euromoney, which shows that as many as two-thirds of executives have interest in adopting automated, around-the-clock currency conversion activities. Along with real-time conversions comes the need for real-time FX volatility management. Other areas of real-time processes include cash and liquidity management.

That comes as faster payments remains a greenfield opportunity for firms. Data from NACHA — The Electronic Payments Association shows that roughly 6 percent of the two million same-day ACH transactions made in the first 11 days after its launch were B2B transactions, signaling room for growth.

In one example of the trend of looking toward FX risk, Jay Wissema, director of business development at cross-border payment solutions provider Volopa, said that trade disputes and other events such as Brexit show the importance of such risk management. Despite surveys from the likes of American Express that show optimism about cross-border activity remains high among small business owners, the same large-scale events have caused them to change their cross-border business strategies. Wissema told PYMNTS that prepaid cards can be an effective tool in risk management, as the cards pre-load multiple currencies at predetermined exchange rates.

In company examples SoftBank, a Japan-based telecom carrier, has struck a partnership with Synchronoss and TBCASoft for a new cross-carrier mobile payments service.